How Demographic Change can Bolster Economic Performance in Developing Countries

Falling mortality rates spurred by medical, nutritional and lifestyle changes have
spurred a ‘demographic transition’ in a majority of the world’s countries. As couples
realize their children are more likely to survive, they need, and eventually have,
fewer of them to attain their desired family size. In addition, desired fertility
tends to decline as earnings opportunities improve since forgone income is such a
large portion of the cost of childrearing. In the lag between mortality and fertility
declines, a ‘boom’ generation is created, which is larger than both preceding and
successor cohorts. As this boom generation reaches working age, the combination
of a greater supply of workers and fewer dependents to support gives countries
the opportunity to collect a ‘demographic dividend’. If an appropriate policy
environment is in place for making the most of this opportunity, the economic
benefits can be, and in many cases have been, great.